Robert Bingham v. National Liability & Fire Co.

Springfield, Missouri insurance law lawyer represented the Plaintiff on a breach of contract theory.





On December 1, 2011, Bingham was travelling to a jobsite in a van owned by his employer, Recovery Chapel, Inc. ("Recovery Chapel"), as part of Recovery Chapel's "Honest Days Work" program.[2] The van and its occupants were involved in a single vehicle roll-over accident. National was the business auto liability insurer for Recovery Chapel.



Bingham made, and received payment for, a Workers' Compensation claim. He then filed a personal injury lawsuit in March 2012, against Aaron Edwards ("Edwards"), Farris Robertson ("Robertson"), and Recovery Chapel, for injuries he sustained in the accident. Edwards and Robertson were also employees of Recovery Chapel. Edwards was the driver of the van at the time of the accident. Robertson was alleged to be the director in charge of Recovery Chapel and its work program. Bingham voluntarily dismissed Recovery Chapel from the lawsuit with prejudice in September 2012. The initial Petition for Damages was amended and Dan Harmen ("Harmen") was added as a defendant in January 2013.[3] Harmen was also an employee of Recovery Chapel. Bingham dismissed the lawsuit against Edwards, Robertson, and Harmen without prejudice in December 2014.



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In November 2016, Bingham filed a new lawsuit against Edwards, Robertson, and Harmen. Harmen was personally served with the new lawsuit on July 27, 2018, at the Moberly Correctional Center. Harmen failed to file a responsive pleading to Bingham's Petition for Damages within 30 days of being served. On August 20, 2018, because National defended the initial suit against Robertson and pursuant to defense counsel's instructions in that case, Bingham gave notice directly to National that Harmen was served. National failed to file a responsive pleading on Harmen's behalf. On September 11, 2018, Bingham filed a Motion for Default Judgment against Harmen. On September 20, 2018, the trial court granted an Interlocutory Judgment of Default against Harmen. On October 18, 2018, the trial court held a hearing on damages and, on October 19, 2018, entered a default judgment ("2016 Judgment")[4] against Harmen, stating in part:



The Court grants Plaintiff judgment against Defendant Dan Harmon [sic] in the sum of $250,000, Plaintiff's costs incurred in prosecuting the action, and lawful post judgment interest until the Judgment is paid in full.



On June 12, 2020, Bingham filed his first Equitable Garnishment Petition against Harmen and National, styled Robert Bingham vs. Dan Harmon and National Liability and Fire Insurance Company, Case No. 2031-CC00702 ("Garnishment I"), in the trial court, claiming National's insurance policy covered Bingham's injuries. Harmen's summons was returned "non est - moved no forwarding address" on June 26, 2020. National was served on July 6, 2020, and it retained counsel to defend Garnishment I. Bingham and National began negotiations to settle the matter. Bingham dismissed Garnishment I against Harmen and National without prejudice on or



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about July 20, 2020, agreeing not to pursue further action against Harmen "at this time" to allow National to "get [its] file in order" and "to select a mediator in hopes of mediating[.]"



Mediation was scheduled for April 23, 2021. Before the mediation date, National extended a pre-mediation settlement offer of $25,000 to Bingham in a letter, which also set forth reasons why National believed there was no coverage under its insurance policy for Bingham's claim and pointed out the 2016 Judgment did not properly include a rate for post-judgment interest as required by statute. Bingham did not respond to National's offer, but instead canceled the mediation. National's counsel and Bingham's counsel continued to talk, including a discussion about finding Harmen so he could attend mediation.



Less than three months after Bingham's counsel canceled the mediation and instead of resuming settlement negotiations or scheduling a new mediation, on July 16, 2021, Bingham filed his second Equitable Garnishment Petition against Harmen and National, styled Robert Bingham vs. Dan Harmon and National Liability and Fire Insurance Company, Case No. 2131-CC00769 ("Garnishment II"), in the trial court. Bingham's counsel did not notify National's counsel that he filed Garnishment II. Service of process was made on Harmen on September 16, 2021, and the registered agent for National on September 27, 2021. National's registered agent forwarded the summons and petition to National, where it was processed by National Claim Support Technician Beck Lane ("Lane"). Lane mistakenly assumed the petition was a duplicate of Garnishment I. Lane marked the summons and petition as a "Duplicate Suit" and stamped it "Copy of suit previously received." Lane forwarded the summons and petition to the National claims examiner handling Bingham's claim, Kim Hodgen ("Hodgen"). Hodgen accepted the documents as duplicates and did not forward the documents to National's legal department.



National took no action on the summons and petition in Garnishment II, and neither National nor Harmen filed a responsive pleading in Garnishment II.



Bingham filed a Motion for Default Judgment on October 28, 2021, along with a Notice of Hearing setting a hearing for five days later on November 2, 2021. Neither Harmen nor National appeared at the hearing. The trial court entered Bingham's proposed judgment ("Default Judgment") in favor of Bingham and against Harmen and National in the amount of $250,000 damages, post-judgment interest of 5% from the date of entry of the underlying judgment and post-judgment interest of 5% on November 3, 2021, stating in part:



The Court grants Plaintiff judgment against Defendant Daniel Harmon [sic] and Defendant National Liability and Fire Insurance Company in the sum of $250,000.00, lawful post judgment interest at 5% from the underlying October 19, 2018 Judgment to today of $39,406.25, Plaintiffs costs incurred in prosecuting the actions of $8,039.56, lawfull [sic] post judgment interest of 5% until the Judgment is paid in full, Plaintiff's costs incurred in collecting the judgment, and lawful post judgment interest until the Judgment is paid in full.



(Emphasis added to show that "underlying" was handwritten in the Judgment by the trial court).



One year and one day after the Default Judgment was entered, on November 4, 2022, Bingham sent notice of the Default Judgment to National.



On December 28, 2022, National filed a Motion to Set Aside Default Judgment pursuant to Rule 74.06(d).[5] National conceded in its motion that its arguments to have the Default Judgment set aside are out of time as prescribed by both Rule 74.05(d) and Rule 74.06(c),[6] but argued it nevertheless met the standard for setting aside the Default Judgment under Rule 74.05(d), as it had both a meritorious defense and good cause, and that it met the standard for setting aside the Default Judgment under Rule 74.06(b)[7] because the Default Judgment was the result of a mistake. As such, National argued that the trial court should, in an independent action in equity, set aside the Default Judgment using the equitable power of the trial court pursuant to Rule 74.06(d). National also acknowledged that "[a]n independent action in equity to set aside a default judgment must be based on extrinsic fraud[,]" Mathers v. Allstate Ins. Co., 265 S.W.3d 387, 390 (Mo. App. W.D. 2008), "that is, fraud which 'prevent[s] a party from having a fair opportunity to appear and defend an action.'" Jones v. Jacobs, 988 S.W.2d 97, 100-101 (Mo. App. W.D. 1999) (quoting McKarnin v. McKarnin, 795 S.W.2d 436, 440 (Mo. App. W.D. 1990)). It further argued that the actions of Bingham's counsel in not notifying it of Garnishment II or the Default Judgment constituted the extrinsic fraud on the court required to set aside the Default Judgment. It also requested that, if the facts did not meet the extrinsic fraud required,



the test must be changed because, as is, the test allows for manifest injustice; furthers predatory use of Missouri's default judgment system; discourages civil, courteous, and common sense communication between opposing parties; and harms and punishes a party that had been fully and completely participating in the claim with good faith.



Bingham responded to National's motion asserting "[National] has provided no evidence that [Bingham] did anything to induced [sic] it to default in Greene County case number 2131-CC00769 which is the basis for this motion." Instead, Bingham asserts its counsel had "no legal duty to take any of the actions [National] suggests" and that National's "inattention and neglect induced [National] to default."



On September 22, 2023, the trial court entered its Judgment denying National's motion after an evidentiary hearing. The trial court concluded, "[t]he only ground for relief available to National is pursuant to Rule 74.06(d)"; that while Rule 74.06(d) "seems to set forth two grounds to seek equitable relief from a judgment, decisions interpreting Rule 74.06(d) indicate that a party seeking relief under 74.06(d) may only claim that the judgment was procured by a fraud on the court" but that such a reading "would appear to ignore the language of subsection (d)" since subsection (d) "contains a clause expressly permitting a party to seek relief for fraud upon a court" and that the "interpretation set forth in the above-cited cases either renders the first half of 74.06(d) superfluous, or renders the language of the second half of subsection (d) redundant" and therefore, "interpretations of subsection (d) as set forth in the Mathers, Sanders and Orrock cases appear to contradict the language of Rule 74.04(d)." The trial court further concluded National provided evidence of a meritorious defense and offered evidence amounting to accident, mistake, or excusable neglect, but that there was no evidence indicating National's actions were done to delay proceedings or interfere with the legal process, that there was no evidence of neglect, and that National's failure to discover the error did not prejudice Bingham. Despite these findings and conclusions, the trial court determined it was bound by precedent: "Rule 74.06(d), as interpreted by appellate courts, requires a showing of fraud upon a court before a default judgment can be set aside. There is insufficient evidence of fraud." National appeals the trial court's Judgment denying its motion.



Bingham v. Nat'l Liab. & Fire, Co., SD38272 (Mo. App. Nov 12, 2024)

Affirmed